Why did the value of gold coin investments take a sudden and dramatic leap yesterday after treading water for weeks?

October 26, 2011 – Why did the value of gold coin investments take a sudden and dramatic leap yesterday after treading water for weeks? Until the price resumes a steady and prolonged upward trend I see such things as just another spasm of a dying market.

To paraphrase an old television commercial, it’s not nice to fool with Mother Market. She is choking on a glut of fiat money and is righteously ticked off. Yet central banks everywhere are preparing to fire up the presses one more time.

Here at home the vaunted Deficit Commission has proven to be as divisive as the whole of Congress, and probably more so. Republican members have all signed the Norquist pledge for no new taxes and the Democrats aren’t about to agree to entitlement cuts with that off the table.

Politicians have proven once and for all that they have no intention of putting their house in order. The Fed knows it has failed to pass the proverbial buck back to where it belongs and now finds itself backed into a corner.

“Securities purchases across a wide spectrum of maturities might become appropriate if evolving economic conditions called for significantly greater monetary accommodation,” Federal Reserve Vice Chairman Janet Yellen said before the annual meeting of the Financial Management Association International. Yes, they are preparing for QE3 to set sail.

It’s lose-lose no matter how you look at it. Without responsible leadership our economy will continue to spiral out of control. Uncertainty over the future of the dollar will turn to certainty that it is too ill to be revived. And Mother Market will clean house, sweeping it clean of worthless paper money.

What would it take to bring the global money supply into some sort of balance with global wealth? That is what a return to the gold standard would do, and it means that gold would have to start selling for $11,000 an ounce. Every day that we lollygag drives the price ever higher.

I doubt we’ll see prices that high any time soon, but Mother Market will make sure it heads in that direction. She neither creates nor destroys wealth, only facilitates its transfer. Many will decry their loss of riches, but wealth created by and stored in fiat money never really existed.

On the other hand, wealth stored in gold is real. Mother Market will see to it that wealth secured by gold coin investments will endure.

Kevin Johnson

Senior Staff Writer – GoldCoin.net